In the world of trade and protectionism, tariffs are far from rare, and in fact are often used by many nations under the guise of ‘duty or import taxes’. And when it comes to President Trump’s plans to institute a 30% tariff on imported steel and aluminum, he is not even the first U.S. Commander-in-Chief to implement them here in the 21st century.
In an eerie analogue of what is about to take place, on March 5, 2002 President George W. Bush imposed tariffs as high as 30% on global steel imports.
The temporary tariffs of 8–30% were originally scheduled to remain in effect until 2005. They were imposed to give U.S. steel makers protection from what a U.S. probe determined was a detrimental surge in steel imports, as more than 30 steel makers had recently declared bankruptcy.
In the end trade wars benefit no one, however for Donald Trump, the root of his trade policy may not necessarily be about protecting domestic industries or punishing foreign exporters. In fact the reality is that America has little to no industry left at all, and this move to incite a trade war could actually be more about forcing companies to move back to American shores to rebuild those industries since this is perhaps the only option left available for being able to cut a nearly $1 trillion trade deficit.
Naturally the rest of the world will retaliate in kind, imposing their own tariffs on U.S. goods while at the same time taking Washington to court at the World Trade Organization. But in addition to this, there is also the potential that governments may retaliate in a different way, and that is to go after the dollar and America’s long-standing ability to be able to print as much money as it wants in order to afford to pay for $800 billion of imports.
And the combination of these actions will inevitably be good for gold and silver…. just as it was 16 years ago when President Bush imposed his tariffs.
Over 2002, gold gained 25% on the year.
But the tariffs lasted most of 2003 as well (ending on December 4th, 2003).
Here’s how gold did throughout the entirety of 2002-2003 (Dec): – Silver Doctors